Buying or acquiring assets

Overview

This article explains how to create records of assets owned or held by a trust.

 

 Contents 

1. Acquiring an asset

2. Recording the nature of acquisition

3. Types of asset & asset accounts

4. How it was paid for - The gifting parties

5. Add supporting information and create

 

Acquiring an Asset 

To record an asset for a trust, navigate to the trust's Ledger tab and select the "I would like to..." menu, then "Acquire an asset"  

acquire_asset_2.png

 

Recording the Nature of acquisition

In the subsequent form, first record how the asset is being acquired. There are four options:

  • Settled into the trust (on settlement)This records that the asset was settled into the trust as part of the trust settlement. (Note that this option can only be selected if a settlement date is recorded in the trust's profile. When selecting this option, the date of acquisition field will be locked to the trust's settlement date.
  • Being gifted to the trust This records that the trust received the asset as gift, other than during settlement of the trust.
  • Being purchased by the trust - This records that the asset was purchased by the trust.
  • Not sure - Use this option if you don't hold any records on the origin of the asset. 

Once the method of acquisition has been selected, you must then record the date of acquisition and the value of the asset. 

nature_of_aquisition__1_.png

 

Types of asset & asset accounts

When a new trust asset is acquired, Connectworks automatically creates an account corresponding to that asset. Any additional transactions performed on the asset (such as sales or sell-downs, capital additions, or revaluations) are recorded as adjustments to the value of the asset account.

It is also possible to acquire assets against existing asset accounts. This may be done, for example, when cash is received as a gift and is deposited into a bank account that has already been manually created.

1. Once the nature of acquisition, date of acquisition, and value of the asset have been entered, record the type of asset being acquired. There are two options available:

  • Real Estate
  • Investment (shares, etc)
  • Other (tangible property, etc)

2. Then either type in the name you would like to give your new asset account (which will be created when you have completed the form) or select the "use an existing account" option and choose an account from the drop-down menu.

acquire_asset_3.png

 

How it was paid for - The gifting parties

The movement of funds into an asset account that occurs when an asset is acquired can be balanced by recording a movement of funds out of another account (or accounts). This second movement traces the source of the funds that moved into the asset account.

Recording the origin of funds is optional. If you choose not to record anything then the asset value will be balanced against the Gift account.

Asset acquired as a gift or by being settled into the trust on settlement

Funds for assets acquired as gifts or by being settled into the trust on settlement can only be sourced from non-bank current or loan accounts. To achieve this accounts that have already been created for the trust can be selected from the dropdown menu, or a new account can be added when you record the asset.

If more than one account has contributed to the asset, you can record a portion of the gifted value against each contributing party by selecting the "add" button which appears after completing the details of the first party (see screenshot below).

If a source of funds is recorded then upon creating the transaction two sets of balancing account movements will be recorded.

First:

  • The asset account will be credited the value of the asset.
  • The source of funds/gift account(s) will be debited the value of the asset.

Second:

  • The source of funds/gift account(s) will be credited the value of the asset.
  • The trust's gift account will be debited the value of the asset.

If no account is specified as the source of the funds/gift, the source of funds will be allocated to the trust's Suspense account.

gifting_parties.png

Assets acquired by purchase 

If the asset was acquired as a purchase, the source of funds account can be selected from the dropdown menu, or a new account can be added.

If more than one account has contributed to the purchase, you can record a portion of the purchase value against each contributing account by selecting the "add" button which appears after completing the details of the first account.

If an account or accounts are specified as the source of the funds/gift, then upon creating the transaction, two balancing account movements will be recorded:

1. The asset account will be credited the value of the asset

2. The source of funds/gift account(s) will be debited the value of the asset

If no account is specified as the source of the funds/gift, the source of funds will be allocated to the trust's Suspense accountacquire_asset_4.png

 

Add supporting information and create the asset

In the final section you have the opportunity to add any additional notes on the asset acquisition. 

Once all the above steps have been completed select "Create" in the top right and the asset will be recorded.

Supporting documents are uploaded directly into the documents tab, as outlined in our article Storing & Accessing Documents.